TMI Blog2023 (5) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... ible in the gross value for levy of service tax. The issue is no longer res integra. The Hon ble High Court of Delhi in the case of INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT] held that reimbursements of amounts it received cannot be charged to service tax. This issue with regard to non-payment of service tax on the reimbursable expenses travelled upto Hon ble Apex Court wherein it got settled by the decision in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] The Apex Court has held as per Section 67 (un-amended prior to 1st May, 2006) or after its amendment with effect from 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having its registered office at 3rd Floor, DLF Centre, Sansad Marg, Delhi, had entered into an agreement with its holding company, namely The Boeing Company [ TBC ] for providing services on a cost plus mark-up basis. In order to provide service effectively and efficiently, the Appellant employed employees of TBC on secondment basis. The Appellant entered into a salary reimbursement agreement with TBC to facilitate secondment of employees from TBC to it and payment of remuneration to the seconded employee in their home country. Pursuant to service tax audit by the department, the impugned show cause notice was issued demanding service tax on the expenditure incurred towards hotel stay, school tuition fees for the disputed period considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same were incurred by the Appellant directly, except for school tuition fee where payment was made by the seconded employees and then reimbursement was claimed. He added that an employer-employee relationship came into existence between the Appellant and the seconded employees and such arrangement will not fall under the definition of 'service' under Section 65B(44) of the Finance Act. Further, provision of service by an employee to the employer in the course of or in relation to his employment has been excluded from the definition of service under Section 65B(44) and hence does not attract service tax. 6. The learned counsel also submitted that the expenses incurred in India, by way of reimbursement of school tuition fee (o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable. Accordingly, they need to be set aside. When the demands are liable to set aside various penalty imposed are also not sustainable . (ii) Telenor Consult AS vs. Delhi-I [2019 (2) TMI 955 - CESTAT NEW DELHI], wherein on the similar facts, the Hon ble Tribunal has held that service tax will not be applicable on the benefit provided by the service recipient to the secondee. 8. He stated that the issue regarding taxability of secondment of manpower has been settled in favour of assessee, as held in the following decisions- M/s Target Corporation India Put Ltd vs C.C.E. - Bangalore-II [2021 (1) TMI 712 - CESTAT BANGALORE] M/s Yutaka Auto Parts India Private Limited vs The Commissioner, Central Excise Service Tax Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from the parent company. He added that section 67(1) (i) of the Act specifically provides inclusion of such value of non-monetary consideration in taxable value. 11. We have heard the learned counsel for the appellants and the authorised representative. The issue of payment of service tax on secondment has been settled by the Supreme Court in the case of Commissioner of Customs, C.Ex and Service Tax, Bangalore (Adj.) Vs Northern Operating Systems Pvt Ltd [2022(61)GSTL129(SC)]. The issue is whether reimbursable expenses are includible in the gross value for levy of service tax. We note that the issue is no longer res integra. The Hon ble High Court of Delhi in the case of Intercontinental Consultants Technocrats Pvt Ltd Vs. Union of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sense that only the service actually provided by the service provider can be valued and assessed to service tax. We are, therefore, undoubtedly of the opinion that Rule 5(1) of the Rules runs counter and is repugnant to Sections 66 and 67 of the Act and to that extent it is ultra vires. It purports to tax not what is due from the service provider under the charging Section, but it seeks to extract something more from him by including in the valuation of the taxable service the other expenditure and costs which are incurred by the service provider in the course of providing taxable service . What is brought to charge under the relevant Sections is only the consideration for the taxable service. By including the expenditure and costs, Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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